Disagreements of economists about the us economic stimulus package

Disagreements of economists about the U.S. economic stimulus package

11:49:36 | 28/07/2010

Economists use different models to determine the impact of U.S. economic stimulus packages . Some models work very well , but there are also completely useless model , which leads to the disagreement.
One of the founding fathers of America , trying to President Thomas Jefferson , who do not salty but with budget deficits , have a clear view of the economic stimulus policies of the United States than any political any surviving family . From his memorial beside Lake Tidal Basin in Washington , he could witness the plan worth 12.4 million dollars to repair dikes and kept him from being submerged under water .

At a hearing in Congress , Mark Zandi , chief economist at Moody's Analytics , said that every dollar used in the construction of infrastructure to generate $ 1.57 in GDP within a year , and that without have the economic stimulus package is , the number of unemployed could rise further 2 million .

he followed John Taylor , an economist at Stanford , said that government spending " is not relevant to several cycles of economic activity . " Mr. Taylor estimated stimulus package will the extra 70 cents on each dollar of GDP for consumption .

The problem is that economists can not return the crisis to try again - this time without the dikes built by the government - to see what happens . Instead, they must rely on models and historical data to determine whether the crisis will be worse if not how can the fiscal stimulus package . In some models , the stimulus package works very well , while in some other models it completely useless , which is why economists give different results .

The highest prediction about the effects of the stimulus package - up to 2 dollar added to GDP for each dollar spent - from tissues to the broad macroeconomic picture is used by the Fed and the companies such as Moddy . The model refers to all aspects of the economy and a source of government data by Mr. Obama.

Some academic economists that the only shot macroeconomic model based on the calculation of all data , rather than special theories . Robert Barro from Harvard University argue that they find the impact from the stimulus package because they assume that governments are spending much more and create more output , while it can happen in a way other . Gus Faucher , director of macroeconomic Economic.com of the page , that this assumption is based if the spending takes place before output increased.

Barro 's own research shows that a dollar spent on national defense fields to reduce GDP by about 40-50 cents in the short term . The analysts say this figure is not appropriate because it is based on data taken from World War II , when the division makes portions of personal consumption fell .

Mr. Taylor said that the macroeconomic model wide " little attention to the expectations " as the " new Keynesian model , " which he used . Many of these models , which is popular in academia , it is assumed that the anticipated future taxes to pay for the stimulus package . This restricts any increase in spending .

The new models Keynesian model also was criticized by most of them do not include the financial aspect and therefore does not explain the causes of the crisis .

Mr. Faucher said, " Until the specialists like Mr. Taylor could not explain why we have problems in crisis again , it is difficult to make people believe in its conclusions about the stimulus package . "

Many of the new models Keynesian model estimated that the stimulus package will bring from 50 cents to one dollar for each dollar of GDP spent on normal time . But they have also calculated the figure is 3.9 dollars when interest rates are zero , in 2009 as now , and the central bank may not cut interest rates further to stimulate the economy .

Robert Hall , president of the American Economic Association , says in an article : " In an economy where output multiplier for government procurement accounts under one in normal time , some individuals will increase to 1.7 when the monetary policy becomes the nominal interest rate with 0.

This is similar to what economists agree - though his opponents as Barro or Taylor - the stimulus package that delivers big impact . However , if there is no more clear evidence of any recommendations on a new economic stimulus package would be so difficult to overcome concerns about the national debt is increasing .

Source: New York Times / STX